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Operations Research Enhanced Supply

Chain Management at the US Coast Guard


Aircraft Repair and Supply Center
Team Members

• USCG Team
– CDR Carl Riedlin
– LCDR Mike Shirk
– LCDR Kent Everingham
– LCDR Gary Polaski
• Purdue Team
– Prof. Vinayak Deshpande
– Prof. Ananth Iyer

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Cultural Transformation
Through …

USCG ARSC + Purdue = OR ingrained

+ =

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Route of Flight

• US Coast Guard Roles & Missions


• Logistics Network
• Ops Research & Purdue/Coast Guard Partnership
• Four Projects:
– MIDAS, REAP, CRISP and OPT
• Impact & Organizational Transformation

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Aviation Facility Location &
Allocations

Port Angeles 3 HH-65C

Astoria 3 HH-60J Traverse City 5 HH-65C Cape Cod


4 HU-25C
North Bend 5 HH-65C 4 HH-60J
Detroit 5 HH-65C Atlantic City 10 HH- 65C
Humboldt Bay 5 HH-65C
Washington
Sacramento 4 HC-130H 1 C-37
1 C-143
San Francisco 4 HH-65C Elizabeth City
ATC Mobile 4 HC-130H
Los Angeles 3 HH-65C 4 HU-25A 5 MH60-J
7 HH-65C 1 HC-144A
San Diego 3 MH-60J 3 MH-60J Savannah 5 HH-65C
Houston- 4 HH65C HITRON 8
New Orleans- 5 HH-65C MH-68A
Kodiak Corpus Christi
5 HC-130H Miami
3 HU-25C Clearwater 6 HU-25D
4 HH-65C 3 HH-65C 6 HC-130H 9 HH-65C
4 MH-60J
Barbers Point 9 HH-60J
4 HC-130H
Sitka 3 HH-60J 4 HH-65C Borinquen 4 HH-65C
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HC-130: 22 Operational - 5 Support / HU-25:17 Operational - 8 Support / HH-60: 34 Operational - 7 Support / HH-65: 84 Operational - 11 Support
Aircraft Repair and Supply
Center (ARSC)

• One stop shop for all aviation logistics support


– Depot level maintenance
– Supply engineering
– Spare parts inventory management
– Component repair
– Information services
• 60,000 individual parts,
– Inventory value over $937 million
• Annual maintenance budget over $154 million for
over 6000 parts
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Un-Scheduled Scheduled
ACMS Data Maintenance
Failures

Air Station Maintenance


Repair Shop
AMMIS Data

Warehouse Item Managers


- Air Station
Procurement Specialists
- ARSC

failed parts
Component Vendors (OGA good parts
Repair (Internal) & Commercial)
Clear & Present Danger…

• Highly complex supply-chain


• Various groups focused on a specific task
– Reliability Center Analysis
– Inventory Replenishment & Budgeting
– In-House Repairs & Capacity Management
– Procurement & Best-Value Contracting
• Need for information collaboration between groups
• Impending “Brain Drain” in Federal Gov’t
– Item Manager / Procurement Specialists Retirement

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A Partnership is Formed

• Purdue a Best Value in Advanced Education


– Coast Guard officers in MBA & Structures programs since 1970s
• Initial contact in 2001 with 2 goals
– Validate OR capability with ARSC
– Lead cultural change in face of budget & people crisis
• Prof. Deshpande & Iyer form a team
• Exhaustive review of supply-maint business processes
• Concise project definition & contracting deliverables
– MIDAS = Turning Data into Gold

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Project 1: MIDAS
(June 2002-April 2003)

“Improving Aircraft Service Parts Demand Forecasts


and Inventory Management using Scheduled
Maintenance Data”

3 Main Tasks
1. Integrate ACMS maintenance and AMMIS demand data
2. Build Demand Forecast Models
3. Policies for effective inventory management using
maintenance data

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MIDAS Methodology
and Results

• Gathered extensive maintenance and demand data on


41 critical components consisting of 50% of budget

• Created a Linear Programming model to link the


maintenance data and demand data for these 41
components

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Database Match Example

ACMS maintenance Database AMMIS demand Database


RCi ii ri cj sj pj
TRBL 11/25/97 11/25/97 10/16/97 10/17/97 12
TIME 07/09/98 07/09/98 11/20/97 11/24/97 12
TIME 07/30/98 07/30/98 07/07/98 07/07/98 2
TRBL 10/28/98 10/28/98 10/29/98 12/02/98 5
TIME 01/05/99 01/05/99 03/11/99 04/13/99 5
TIME 04/15/99 04/15/99 03/18/99 03/22/99 5
TIME 04/22/99 04/22/99 11/08/99 11/15/99 5
TIME 12/14/99 12/14/99 08/24/00 08/25/00 2
TRBL 08/28/00 08/28/00 05/01/01 05/23/01 2
TIME 06/06/01 06/06/01 06/15/01 06/25/01 2
TRBL 06/29/01 06/22/01 06/25/01 07/10/01 2
TRBL 07/20/01 06/29/01 03/05/02 04/19/02 5
TIME 05/08/02 05/08/02 13
TRBL 08/08/02 08/08/02
ACMS Data
Young Parts Old Parts

Failed parts at Good parts at


Warehouse Warehouse
L1
L2 IM’s
AMMIS Data
failed parts
good parts
re-supply order
Component Re-Supply
Part-Age Distribution
of Installed Parts

100%
Cumulative Distribution

80%

60%
Oct. '98
Oct. 2000
40%

20%

0%
0 500 1000 1500 2000 2500 3000
TSO

Time Since Overhaul 15


SIGNAL Dependent
BASE STOCK

• SIGNAL each period = # parts beyond Threshold age


• Correlate the SIGNAL and Demand over lead time
• Use the conditional distribution and costs to set
BASE STOCK = Function(SIGNAL)
• Evaluate the optimal THRESHOLD
• Empirical Results showing cost impact on Inventory
levels
• Proactive Inventory Management

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Data Becomes Gold

(1) LP tools used to match maintenance records


and inventory
(2) Part Age (accumulated flight hours)
information improves demand forecast
(3) Part Age based triggers for advance orders
(4) Empirical results show cost reductions ranging
from 20% to 70% for over 90 % of the parts
examined
(5) The advance orders enable separation of
supply processes for replenishment and
advance orders and can be used for budgeting

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MIDAS Project
Organizational Impact

• Establishment of OR Cell
– 4 new positions & summer interns
– Expanded budget planning-execution authority
• Demand forecasting & budgeting using MIDAS
– Partnering with Item Managers
• Supply Chain Management Business Solution
– Scalable, repeatable, supportable solution
– Up-to 100,000 stocking units
– Data warehouse
– AMMIS – ACMS bridge

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Project 2: REAP
(June 2003-May 2004)

“Improving Scheduling of Repairs of Parts


using Scheduled Maintenance Data”
Main tasks:
(1) Understand current repair release approaches using
empirical data
(2) Develop Component Repair Capacity Planning
Models to choose the optimal repair mix including
internal vs vendor repair choices.
(3) Estimate the impact of adjusting releases on
performance of the repair shops

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Components vs TSO

The data shows that as part age increases, the number of 21


components to be replaced and labor content increases
Role of LP Models

• The optimization models try to minimize costs


while maintaining safety stock of parts and
completing contracted number of part repairs in
the shop

• Models capture the impact of shop costs using


vendor capacity, using overtime, coordinating
repair releases with IMs etc.

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REAP Optimization Model

  Minimize Sum of in-


Min ∑ ∑ CGi X it1 + ∑ ci X it2 + ∑ CO j OR j  house repair, vendor
repair and overtime
t  i i j  capacity costs
s.t ∑ aij X it1 ≤ R tj + OR tj Resource availability constraint
i

I ti −1 + X it1 + X it2 − ( DAit + DRit ) = I ti Demands composed of


advance and regular orders
I ti ≥ Z ⋅ σ ( DRit ) Safety stock only needed for regular orders

∑∑ i i 2 ≤ B
t
c X
i
t
Budget constraint

Where i is for NIIN and j for shop or resource. 23


REAP Methodology
and Key Results

• Data Analysis to link


– AMMIS
– ACMS
– Extended WO data

• Link TSO to labor, material data

• Optimal component repair capacity planning LP models

• Use models to project a 10% savings in repair costs

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REAP Project
Organizational Impact

• Developed 2 bill of material (BOM) lists based on


TSO (young vs old failures)
• Linked BOM to extended work order
• Used BOM to assist with budget builds
• Shadow price of $ 6500 per hour for specific
resources
• Adjusted resources and skills
– Release shop repairs to optimally use scarce shared repair
resources
– Coordinate IM management
– Use material usage data to create realistic BOM

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Upgrade of HH65 “Dolphin”
Helicopter

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Restore Unrestricted Ops

• Restore safety, increase payload and


operational flexibility
• Retrofit HH65 with “Turbomeca” engines
• Improve gearbox durability – upgrade 135 units
• Urgent requisition - 2 year completion mandate
• How do we accomplish this?

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Project 3: CRISP
(June 2004-May 2005)

• CRISP required a model of the impact of:


– Availability of overhaul kits and parts
– Planned overhaul vs modification
– Associated spare parts required
– Overhaul interval
– Future overhaul
– Different levels of aircraft operation (C with G4, C
with G2, switch back and forth, etc.)
– Resources available

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States and Transitions
t t+1 t+2 t+L1 t+L1+1 t+L2 t+L2+1 t+L1+MTTF1 t+L2+MTTF2 t+L2+MTTF3

NRFI G2
1 1 1 1 1 1 1 1 1 1

NRFI G4
2 2 2 2 2 2 2 2 2 2
In Repair G2
3 3 3 3 3 3 3 3 3 3

In Repair G4
4 4 4 4 4 4 4 4 4 4

RFI G2 5 5 5 5 5 5 5 5 5 5

RFI G4 6 6 6 6 6 6 6 6 6 6

G2 on B Aircraft 7 7 7 7 7 7 7 7 7 7

G2 on C Aircraft 8 8 8 8 8 8 8 8 8 8

G4 on C Aircraft 9 9 9 9 9 9 9 9 9 9

Grounded B 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0

Grounded C 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1
In mod-line
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2

In PDM line
1 1 1 1 1 1 1 1 1 1
3 3 3 3 3 3 3 3 3 3
Features of the MIP Model

• Model possible states of individual aircraft and


individual components
• Evolution of configuration over time
• Impact of overhaul or modification schedule
• Impact of constraints on level of flexibility (B,C-G2,C-
G4, switchover)
• Weighted by upgrade level over horizon to maximize
aircraft uptime
• Mixed Integer Program with network substructures

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Number of Flying Aircraft by
Type Over Time

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Results of the Model

• Model results highlighted the impact of part


availability constraints on upgrade process
• Quantified impact of:
– level of aircraft operation flexibility on
performance
– manufacturer suggested mean time to
overhaul for new components
– spare parts availability

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CRISP Results and
Organizational Impact

• Bottlenecks reduced by productivity changes


– Dual conversion paths
– Lean manufacturing
• Building block for additional analysis
– Spend plans
– Fleet sparing
• Catalyst for a successful on-time conversion

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Deferred Maintenance Crisis

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Project 4: OPT
(June 2005-Present)

• Coast Guard’s “Big Iron”


– 300 NM radius
• essential to cover EEZ
• Alaska and Caribbean
– Critical role in massive disaster relief
• As showcased during Hurricane Katrina
• ARSC HH60 Product Line
– PDM – corner stone process – every 4 yrs
– Logistics and Engineering Support
• Impending failure
– Mission scope creep following 9/11
– Aging airframe and extensive corrosion
• Diminishing overhaul throughput
– Dropped from 9 in 1999 to low of 5 in 2005
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Impending Disaster

• The HH-60 deferred maintenance burden on USCG


reached an all time high of $23.6 Million
• The Impending Train Wreck Operational Groundings
– Starting Mar 07
– 24% of the Coast Guard’s operational fleet
• In order to begin a road to recovery, the HH-60 Product
Line needed to rapidly increase its throughput

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Original PDM Line
Base Case

Disassembly
Start (7 days)

Aircraft Flies in
from Field Unit
Strip
(7 days)

Hull Hull
(58 days) (58 days)

Intermediate
Paint (4 days)

Assembly Assembly
(54 days) (54 days)

Aircraft Returns to
Field Unit
Final Paint
End (9 days)

Ground Turns Fuel Ops


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(12 days) (11 days)
OPT Project Goals

• Capture the links between decisions


regarding
– resources
– inventory
– repair rules
– lead times
• Identify bottlenecks and the benefits of
implementing improvements
• Design plans for MH-60T aircraft conversion

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ARENA Simulation Model

• Captured three sets of flows in the system


– Aircraft cycles of field missions and PDM overhaul
– Component flows on flying aircraft, inventory and
repair
– Modules (within components) flow on components,
field failures, inventory and vendor repair
• Each flow has different criteria
• Model includes component repair, vendor repair
lead-times, contracts, priority rules, repair
triggers, etc.
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OPT : Methodology

• Closed-loop Queuing and Inventory simulation


model in ARENA
– Identified bottleneck processes
• Hull rework
• Final Assembly
– Capture impact of changes on the production line
– Impact of different rules for triggering module repair
– Impact of improving processing times through lean
events
– Impact of inventory positioning (ARSC vs field)
– Impact of WIP inventory changes
– Impact of resource level changes

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Original PDM Line
Base Case
9.14 9.64

Assembly stations 3 Hull stations 3

9.14
6.55 8.06 2 Hull Repair
VV
2 Assembly
4 aircrafts 5 aircrafts 0 hull inventory 9.31
6aircrafts

CC 1 hull

9.29 9.33
7 aircrafts 9.29
Module life 500
2 hulls
9.2
Module life 0 8 aircrafts
9.31 43
9.2
OPT Results and
Organizational Impact

• Reduced process cycle time


– 200 (+) working days down to an impressive 145
– Eliminated $5M annual outsourcing initiative
• Analysis used to drop plans to add 2 hulls at a
cost of $ 10 million (low throughput impact)
• This resulted in an increase in throughput by
80% and a drop in deferred maintenance burden
from $23.6M to a mere $6.5M

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Missions Four Projects

Air-station
CRISP OPT

Aircraft Type
MIDAS

Upgrade Repair

ARSC/E-city

Inventory ARSC Repair Vendor

REAP
Research Impact

Project Concept
• Each project led to an
innovative idea with solid
OR analysis as MIDAS Part Age based
Inventory Levels
summarized in the table (published in Operations
Research)
REAP Repair portfolio of ages

CRISP Linking upgrade rates to


future part demand,
including effect of
flexibility
OPT Inventory, Capacity,
contracts and closed
loop supply chains
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At the End of The Day

Quantifiable, measurable, tangible benefits…


• MIDAS – inventory reduction for critical parts
• REAP – 10% cost avoidance with $200MM budget
• CRISP - Unrestricted H65 Operations
• CRISP – Capacity constraints highlighted
– Catalyst for Lean Manufacturing with $1.2MM savings
• CRISP - Redirect $9.9MM for component sparing
– Gear box, engine control system with long lead-time
• OPT – Ended H60 deferred maintenance crisis
– 80% increase in overhaul throughput

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Organizational Impact
of OR Projects

• Establishment of an Operations Research cell


– Several new employees and interns hired
– Provides critical decision support tools for planning repair and
maintenance activities
– Overwhelming increase in requests to analyze logistics issues
– All new projects expected to be grounded with OR analysis
– Supply Chain Management System (SCMS) being implemented
to leverage information sharing and OR applications across the
enterprise
• Future Initiatives: Aircraft availability simulation

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Social Impact
of OR Projects

• Total cost savings in excess of $ 70 million


• CRISP returned the H-65 aircraft to a safe, reliable
platform
• Prevented grounding of 9 HH-60 aircraft which would
have resulted in loss of 6300 mission flight hours
– Replacing these aircraft would have cost USCG $270 million
• Long procurement lead-times and budgetary realities would
make that infeasible
• True impact of grounded aircraft would have been a drop
in mission readiness from 100% to 96% and mission
execution drop to 4%.
• The social cost would have been our inability to respond
to natural disasters such as Hurricane Katrina
– 33,000 rescues, 5,000 by the HH-60 49
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Questions?

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